top of page
  • Writer's pictureAnna Lau

2020 Review & 2021 Outlook of the Crypto Markets Around the World

When I first heard about Bitcoin, I thought it was impossible. How can you have a purely digital currency? Can’t I just copy your hard drive and have your bitcoins? I didn’t understand how that could be done, and then I looked into it and it was brilliant. Jeff Garzik, Co-founder of


As 2020 came to a close, Bitcoin, the most well-known cryptocurrency, closed the year at an all-time high. Some of the reasons behind this sudden reinvigoration of interest in cryptocurrency include endorsements from mega-corporations, institutional investors going all in, expanded use and growing uncertainties over traditional markets.


As the first decade of the 21st Century came to a close, here are the top 5 major developments of the crypto markets in 2020:

  1. Regulatory Maturity: Many jurisdictions issued regulations to govern cryptocurrency (aka virtual assets) and exchanges. A few key regulatory developments in 2020 enforced by countries include:

    • Starting with South Korea, the Eastern Asian nation became one of the first countries globally to legalize cryptocurrency.

    • The Financial Action Task Force also during this year pushed for enhanced anti-money laundering measures for virtual assets with member states.

    • European Parliament implemented an action plan for comprehensive Union policy on preventing money laundering (with specific reference to virtual assets).

    • France passed the 2020 Ordinance No. 2020-1544 where enhanced anti-money laundering measures targeting cryptos are introduced, specifically, activities involving the exchange of digital assets and other digital assets (aka crypto to crypto).

    • In a move in the midst of Brexit, United Kingdom, passed a policy statement which states rules to ban the marketing, distribution and sale of derivatives and exchange-traded notes to retail customers.

    • United States of America Comptroller of Currency Chief announced the holding of stable coins in its reserves. Cryptocurrency: Enforcement Framework was also announced by the Department of Justice.

  1. The growth of the decentralized finance (“DeFi”) industry accelerated in 2020, growing from $700 million by December 2019 to $13billion on December 31, 2020. DeFi are financial applications that is built using blockchain technology as the underlying tech for operations (e.g. smart contracts). Smart contracts are automated enforceable agreements that once implemented, will not require intermediaries to execute.

  2. China launched the Digital Currency Electronic Payment (“DCEP”) for its central bank digital currency (“e-CNY”) and first tested in Xiong’an, Shenzhen, Suzhou and Chengdu. The e-CNY is hailed as being the first digital currency to be issued by a major economy.

  3. Mass adaptation from institutions. In a surprising twist, Goldman Sachs, a firm historically reluctant to recognize the potential of cryptos in the past, named a new head of digital assets. Fidelity, one of the world’s leading asset management groups, launched a Bitcoin Fund for high net worth investors.

  4. Enter Paypal. Last but not least, PayPal entered the cryptocurrency market, announcing that its customers will be able to buy and sell Bitcoin and other virtual currencies using their PayPal accounts in October, a move that many hailed as large scale proliferation of cryptos going mainstream.

All in all, not only did we see Bitcoin Rising 2.0 in 2020, the significantly larger number of institutional recognition the market received all across the board (as compared to the previous rise during 2017) provides much excitement for the industry overall upon the start of the new decade. As Elon Musk excitedly puts it:

Paper money is going away Elon Musk


If you like gold, there are many reasons you should like Bitcoin Cameron Winklevoss

The following are a quick outlook of the crypto markets for 2021:

  1. Regulatory: The Financial Service and Treasury Bureau (“FSTB”) released a consultation paper on 3 November 2020, proposing amendments to the Anti-Money Laundering and Counter-Terrorist Financing Ordinance, Cap.615 (“AMLO”). Essentially, it is legislation designed to introduce a licensing regime for virtual asset services providers (“VASP(s)”). It is likely that trading platforms for cryptocurrencies in Hong Kong will consider applying for such license if they want to operate in Hong Kong / prepare for such an application ahead of the passing of the legislation (unless they want to find themselves cut off from Hong Kong).

  2. Mainstreaming of Virtual Asset Funds: With the launch of the first cryptocurrency fund in Hong Kong by Venture Smart Asia Limited on 20 April 2020 to purchase, hold and track the price of Bitcoin, and the launch of 4 crypto-related funds (which include a BTC tracker fund, an ETH tracker fund, and a multi-strategy virtual asset fund) by Huobi Asset Management (Hong Kong) Limited on 22 April 2021, we can see a trend of companies in the crypto market launching their own funds. However, currently, such funds are only available for professional investors as defined by the SFO and the Securities and Futures (Professional Investors) Rules.

  3. Anticipated Launch of e-CNY: According to a publication published by Hong Kong Monetary Authority on 4 December 2020, authorities in Hong Kong are actively working with China’s central bank to test e-CNY in payment scenarios, especially cross-border payments. We may see circulation of e-CNY in Hong Kong sooner or later.

  4. Environmental Concerns: Criticisms of Bitcoin using more energy to produce than the energy consumption of entire developing nations is nothing new. However, with Global Warming continuing being a serious global crisis (aside from COVID), more environmentally friendly virtual assets may eventually overtake Bitcoin.

  5. Mainstreaming Trend: When Tesla first announced its adoption of Bitcoin, the price of Bitcoin shot up. Just as quickly as the prices of Bitcoin inflated, so too did Bitcoin price fall when Elon Musk announced suspension of accepting Bitcoin for purchase of Tesla owing to environmental concerns followed by Mainland China’s virtual ban on Bitcoin transaction (many enthusiasts attributed the ban as China’s viewing Bitcoin as competition o the upcoming e-CNY). The act of banning Bitcoin by China (to set the stage for e-CNY) has been argued by some as validation of the virtual asset.


All in all, the market expects rapid and widescale application of virtual assets in Hong Kong and the rest of the Asia Pacific region. The following is a quick key-takeaway sum up:

Operators of crypto-exchanges should remember:

  1. Regulations are coming. It is far better to have your exchange ready to function in a regulated world when laws are passed than relocating. Exchanges should drive (not react to) the change!

  2. Opportunities abound. Hong Kong’s ambitious rollout of regulation should not frighten exchanges but seen as an opportunity to be endorsed (hence mainstreaming) by Asia’s leading financial centre!

Traders on the other hand should be mindful of:

  1. Prices WILL fluctuate: how regulators and businesses treat each token will impact price. It is, therefore, crucial to understand the underlying technology and how it is anticipated to perform (to be received by regulators and users) before each purchase.

  2. Understand your purchase: understanding what you buy is crucial for success. Each purchaser should know the strength and issues (e.g. market potential, energy, etc.) of each purchase.

This article is co-authored by Joshua Chu from ONC Lawyers, and it first appeared in The Law Society of Hong Kong. Read the original article here:


bottom of page